(Aug 14): Mohamed Salleh, founder and CEO of Second Chance Properties, has been buying shares in his company almost every other day for the past couple of months from the open market. Salleh, who is planning to contest in the presidential election, now owns 67.6% of the company. According to the company’s most recent annual report, his stake as at Nov 14, 2016 was 65.8%.

Second Chance runs a chain of apparel and jewellery shops, but its bigger value lies in its portfolio of more than 50 retail units. The company had tried but failed to monetise some of that value three years ago. But there may be a selling opportunity on the horizon.

In 2014, the company tried to sell some of its properties to Celestine Asset Management for $175.4 million. Celestine had planned to repackage the properties into a retail real estate investment trust. However, the plan fell through as the Singapore Exchange was concerned that placing strata-titled properties in a REIT would mean weaker management control. Since then, Second Chance has been selling the assets in a piecemeal fashion.

According to a July 27 report in The Straits Times, owners at the freehold strata-titled mixed development City Plaza are organising an en-bloc sale, targeting a price tag of between $800 million and $1 billion. According to its annual report, Second Chance owns 17 retail units within the mall, covering a total of 837 sq m, or 9,009 sq ft. These are equally spread between the ground and second floors, and are carried on its books at $40.25 million, or 5.4 cents a share. This works out to 15.4% of Second Chance’s net asset value of 34.81 cents as at May 31. EdgeProp.sg has five retail units listed for sale with asking prices ranging between $3,097.60 psf and $5,762.10 psf. A 910 sq ft residential unit is listed elsewhere at $1.4 million, or $1,420.77 psf.

The 45-year-old City Plaza has 465 retail units and 66 residential apartments. It is sited across the road from the massive Paya Lebar Quarter mixed development, now under construction. The latter project, undertaken by Australian developer Lendlease Group and the Abu Dhabi Investment Authority, recently achieved sale prices of up to $1,900 psf for the first phase of its 99-year leasehold residential development. Two months ago, a former public housing estate called Eunosville was sold to MCL Land for $765 million. Privatised in 2011, Eunosville is just over a kilometre from City Plaza. The redeveloped estate might be priced at around $1,700 psf, property consultants estimate.

Besides the 17 retail units in City Plaza, Second Chance’s annual report shows that it owns 34 other retail properties. They are located mainly in residential areas, such as Toa Payoh, Tampines and Boon Lay, with a sprinkling in city areas, such as North Bridge Road, Orchard Road and Scotts Road. It also owns 20 properties in Malaysia, mainly in Johor.

Salleh’s latest purchase was made on Aug 3, when he bought 98,000 shares for $24,990 or an average of 24.49 cents each. His purchases over the previous few weeks have been kept within a tight range of around 25 cents. Salleh’s buying activity has not inspired much excitement among other investors. His trades typically account for the bulk of the day’s total traded volume. Since hitting a peak of 47 cents in April 2014, on the bulk sale plan to Celestine, Second Chance’s shares have declined by around 45%.

The company’s earnings have been declining over the last two years on a softer retail rental market and weaker sales of apparel. It slashed its dividend from 3.55 cents for FY2015 ended Aug 31 to just 0.2 cents in FY2016. In 3QFY2017, Second Chance’s revenue declined 7.7% y-o-y to $9.4 million, as its retail sales and rental income both dropped. However, earnings grew 27.7% to $8.6 million, as the company booked profits from the sale of an investment.

Second Chance shares were down 1.92% to close at 25.5 cents on Aug 8.

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